In an inter partes review of a digital messaging patent owned by Wi-Fi One, LLC ("Wi-Fi"), the Patent Trial and Appeal Board’s rejection of Wi-Fi’s contention that Broadcom Corporation’s review petition was time-barred under Section 315(b) of the Patent Act was based on substantial evidence, the U.S. Court of Appeals for the Federal Circuit has held. In addition, the Board did not abuse its discretion in denying Wi-Fi’s request for discovery purportedly aimed at establishing privity between Broadcom and the defendants in a parallel infringement lawsuit, in order to support Wi-Fi’s time-bar defense. Readdressing the case after the court, sitting en banc, overturned a panel’s previous decision that the Boards time-bar determination was not appealable, the court again affirmed the Board’s ruling that the challenged claims of the reviewed patent were invalid as anticipated. Circuit Judge Jimmie V. Reyna dissented, arguing that the majority incorrectly concluded that to establish privity for Section 315(b) purposes, a petitioner must have had control over the prior district court litigation (Wi-Fi One, LLC v. Broadcom Corp., April 20, 2018, Bryson, W.).

Patent at issue. Wi-Fi’s U.S. Patent No. 6,772,215 ("the ’215 patent") was directed to a method for improving the efficiency by which messages were sent from a receiver to a sender in a telecommunications system to advise the sender that errors occurred in a particular message. In the technology described in the patent, data was transmitted in discrete packets known as Protocol Data Units (PDUs). The useful data or payload in those packets was carried in what are called user data PDUs (D-PDUs). The receiver used a status PDU (S-PDU) to notify the sender of the D-PDUs it failed to receive. The ’215 patent was concerned with organizing the information contained in S-PDUs efficiently so as to minimize the size of the S-PDUs, thus conserving bandwidth. The patent disclosed a number of methods for encoding the sequence numbers of missing packets in S-PDUs.

PTAB review. In 2013, Broadcom petitioned for inter partes review (IPR) of the ’215 patent. Broadcom was the manufacturer of two chips that formed the basis for some of the infringement allegations in a pending patent infringement case brought by Wi-Fi’s predecessor Ericsson, against D-Link Systems and other defendants; Broadcom was not a defendant in that litigation. Prior to institution, Wi-Fi sought leave to conduct discovery to prove its theory that Broadcom was barred from seeking review of the ’215 patent because it was in privity with certain entities involved in parallel district court litigation, which would be time-barred from seeking IPR. The Board rejected Wi-Fi's discovery request, and the Federal Circuit affirmed. The Board subsequently instituted review, and ultimately concluded that the challenged claims were anticipated by U.S. Patent No. 6,581,176 ("Seo").

Time-bar defense. Wi-Fi appealed, and a panel of the Federal Circuit decided that the Board’s decision to deny Wi-Fi’s request to conduct discovery into whether Broadcom’s petition was time-barred under Section 315(b) of the Patent Act was not reviewable. The appellate court also affirmed the Board’s anticipation findings. In January 2018, the Federal Circuit, sitting en banc, held that the Board’s time-bar determinations were in fact appealable, and the case was remanded to the merits panel for further proceedings.

Wi-Fi again argued that Broadcom’s petition for IPR was time-barred. Section 315(b) of the Patent Act provided that the Board may not institute IPR "if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent." According to Wi-Fi, one or more of the D-Link defendants in the infringement suit was in privity with Broadcom or was a real party in interest in the IPR proceeding. Wi-Fi argued that the Board improperly required Wi-Fi to satisfy "a hard and absolute requirement that Broadcom must have had the right to control the District Court Litigation in order to find that a District Court Defendant was a real party in interest or privy," and that the Board "made it abundantly clear that it viewed the District Court Defendants’ right to control this IPR to be of no importance whatsoever."

In the court’s view, Wi-Fi mischaracterized the Board’s decisions regarding Section 315(b). "Contrary to Wi-Fi’s contention, the Board recognized that there are a number of circumstances in which privity might be found, including when the nonparty controlled the district court litigation," the court said. "The Board’s decision to focus on that ground was in response to the specific arguments that Wi-Fi raised on the privity issue." The Board made it clear that it understood that privity and real-party-in-interest status could be established not only by Broadcom’s exercise of control over the district court proceedings, but also by the D-Link defendants’ exercise of control over the IPR proceeding. Therefore, Wi-Fi’s argument that the Board applied an erroneous legal standard was rejected.

Discovery requests. Wi-Fi contended that the Board improperly denied its requests for discovery of evidence, such as the indemnity agreements between Broadcom and two of the D-Link defendants, which purportedly would have established that Broadcom and those defendants were in privity or that those defendants were real parties in interest in the IPR proceeding. The court noted that discovery in IPR proceedings was more limited than in district court proceedings or even in other types of proceedings before the USPTO. Wi-Fi, as the party seeking discovery, had the burden to show that the requested discovery would be likely to produce favorable evidence. The Board decided that Wi-Fi had not met this standard. Reviewing the Board’s decision for abuse of discretion, the Federal Circuit declined to disturb the Board’s decision, stating that the Board had explored the issue in detail and applied the proper legal test.

Substantial evidence for time-bar ruling. Finally, the court disagreed with Wi-Fi’s contentions that the Board failed to provide an adequate explanation for its ruling on the Section 315(b) issue and that its decision on that issue was not supported by substantial evidence. In its Final Written Decision, the Board ruled that Wi-Fi had not shown that Broadcom was in privity with the D-Link defendants or that any of the D-Link defendants was a real party in interest in the IPR proceeding. The Board explained that Wi-Fi’s arguments were no different from the arguments Wi-Fi had made in its motion for additional discovery several months earlier. This explanation was adequate. Furthermore, the decision was supported by substantial evidence. There was essentially no evidence before the Board that any of the D-Link defendants was a real party in interest in the IPR proceeding. Wi-Fi argued that Broadcom was serving the interests of the D-Link defendants when it sought IPR, but, in the court’s view, Broadcom clearly had an interest of its own in challenging the ’215 patent, based on its manufacture of the allegedly infringing chips. "Other than Wi-Fi’s conjecture, there is no evidentiary support for Wi-Fi’s theory that Broadcom was acting at the behest or on behalf of the D-Link defendants," the court said. The Board also reasonably concluded that Broadcom lacked the sufficient control over the district court litigation to justify treating Broadcom as a virtual party to that dispute, for purposes of privity. Accordingly, the court affirmed the Board’s rejection of the time-bar defense.

Anticipation. The panel reinstated the parts of its original September 16, 2016, opinion with respect to the Board’s anticipation findings, which had not been affected by the en banc court’s holding on appealability of the time-bar determination.

Wi-Fi challenged the Board’s substantive determination that Seo anticipated the ’215 patent on three grounds: (1) that Seo did not disclose a type identifier field; (2) that Seo did not disclose a type identifier field within a message field; and (3) that the Board misconstrued the term "type identifier field." All three arguments were deemed unpersuasive.

Wi-Fi argued that Seo did not disclose a type identifier field because it disclosed only a single type of message, and that the single type of message contained fields for encoding errors as both lists and bitmaps. The Board rejected that argument, relying on the disclosure in Seo that certain fields "exist" depending on the value of the NAK_TYPE field. Based on portions of the Seo specification, the Board rejected Wi-Fi’s argument that NAK_TYPE is not a type identifier field. The Board also reasonably credited the testimony of Broadcom’s expert that it would not make sense to include unnecessary fields in a message.

Wi-Fi next contented that even if Seo disclosed a type identifier field, Seo did not anticipate the ’215 patent, because the NAK_TYPE field in Seo was part of the S-PDU header rather than the message field, as required by the claims. The court agreed with the Board’s finding that nothing in the ’215 patent specified whether the type identifier field must be located in the header or any other specific part of the message, and that, in any event, Seo’s NAK_TYPE field was included in the message field. Contrary to Wi-Fi’s assertion, a prior amendment to claim 1 did not show that the claim is drawn to the distinction between the message body and the header. The type identifier field was identified as part of the message field before and after the amendment, so the amendment had no effect on where in the packet the type identifier field had to be located.

The Board construed the phrase "responsive to the receiving step, constructing a message field for a second data unit, said message field including a type identifier field" to mean "a field of a message that identifies the type of that message." Wi-Fi argued that the Board erred because it failed to specify that a type identifier field must distinguish the type of message from a number of different message types. Wi-Fi’s real quarrel was not with the Board’s claim construction, the court said, but with the Board’s finding that Seo disclosed different message types; a conclusion that was supported by substantial evidence.

Lastly Wi-Fi argued that claim 15 of the ’215 patent, properly construed, required that the message field contain either a "length field" or an "erroneous sequence number length field." Because Seo did not disclose length fields of either type, Wi-Fi argued that it does not anticipate claim 15. Wi-Fi’s interpretation was supported by the text of the claim, but it did not make sense in light of the specification, the court found. The ’215 specification made it clear that an erroneous sequence number field can be used absent an erroneous sequence number length field. The Board’s finding that claim 15 did not require the presence of a length field in all cases comported with what the patent taught about the number and length fields, the court said.

The court also reinstated the summary affirmances of the PTAB’s anticipation decisions in related Appeal Nos. 2015-1945 and 2015-1946.

Dissenting opinion. Writing in dissent, Circuit Judge Jimmie V. Reyna took issue with the majority’s determination that to establish privity, a petitioner must have had control over the prior district court litigation. "This narrow standard will make it difficult for a patentee to successfully assert § 315(b)," Judge Reyna argued. "I believe that control of a prior litigation is but one form of privity. Privity may exist in other forms that do not involve control over the prior litigation, all of which are excluded under the standard adopted by the majority. Judge Reyna also opined that Wi-Fi’s motion for additional discovery should have been granted because the record showed that the relationship between Broadcom and the district court litigation defendants went beyond a typical supplier/buyer relationship.

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